Monday, August 22, 2011

CARLTON HOUSE in Hatch End, north London, is a small, friendly place. A private care home, it has 22 elderly residents and a well-stocked garden where they sit of an afternoon. Several say that they like Carlton House, and can think of no way to improve it. But they are unhappy that they have had to sell their own homes to meet the bills of this one.

Even Andy Burnham, the health secretary, has described care for the elderly in Britain as "a cruel lottery". State aid for personal care (medical care is free on the National Health Service) is means-tested: those with [pounds sterling]23,000 in assets must pay for their own. Some end up with bills of [pounds sterling]200,000 whereas others receive care free. About 45,000 people are forced to sell their homes each year to pay for social care. Two-fifths of the roughly 450,000 now in residential-care homes pay their way.

As in other countries, a rapidly ageing population in Britain is pushing the care system towards crisis. Another 1.7m older people in England will require looking after by 2026, the government reckons. This will strain care budgets, which are already heading for a [pounds sterling]6 billion annual gap in funding over the same period.

So the government's long-delayed consultation paper on July 14th was keenly awaited. Two radical options are ruled out: leaving people to pay for their own care and funding it entirely through general-tax revenues (devolved Scotland's version of the latter is already running out of cash). It outlines three approaches.

The first is a system of co-payments, in which the government would guarantee to everyone a payment equal to a quarter or a third of likely social-care costs, picking up more of the tab for poorer folk. The second is optional insurance, which would let people pay [pounds sterling]20,000 to [pounds sterling]25,000 to cover themselves against the rest of the cost of their care. The third is a compulsory state-insurance scheme, under which everyone who could afford it would be liable for a lump sum--paid on retirement, say, or from an estate after death--of [pounds sterling]17,000 to [pounds sterling]20,000 in exchange for the certainty of free care. No serious new government money is forthcoming under any of the options, and state funding would go only towards personal care: the cost of food and lodging in residential homes would fall to individuals who could pay for it.

Just how likely these reforms are remains to be seen. People who already save for their old age worry that they could be forced to cough up an additional [pounds sterling]20,000 for care that they may never want. The proposals offer no guarantee that old folk will be able to hang on to their homes. And lump-sum premiums may prove a particularly hard sell: in a Populus poll for Saga, a firm specialising in services to the over-50s, only 6% preferred this option.

Yet some answer must be found to the escalating expense of looking after an increasingly old and frail population. The biggest difficulty with these proposals is that they come years after Labour first declared its interest in the matter, and far too late to be agreed before the next election. Over to the Tories, who have ideas of their own about sharing costs between individuals and the state.